Things to Consider

Each trader using TradersFreedom has or will develop his/her own individual trading methodology. This section is designed to give the user insight into how they might utilize TradersFreedom as a part of that approach.

The Stock Market is ever-changing and involves risk taking. Although TradersFreedom is designed to take as little of your time as possible, you should consider allocating sufficient time to your overall trading process in order to make informed trading decisions. TradersFreedom is a valuable analytics tool, and will be a great addition to your “trading toolbox”.

TradersFreedom is designed to compliment your own trading strategy and to help each trader make the best trading decisions he/she can make utilizing that strategy. A good trader knows it is unrealistic to expect that he/she will make every penny there is to be made on every trade he/she places. For example, it won’t always be possible to find algorithms with 0% DD, and, if you do, it is possible that 0% DD is an indication that the stock is due for a change in momentum. These are all personal decisions that each trader will make based on his/her own personal beliefs and appetite for risk. Therefore establishing objectives for yourself and keeping good records are important parts of the process.

“Test Period” date ranges:

Each trader will have his/her own opinion about what testing timeframe is most important when considering a trade. Some users will feel that the current market conditions have the most effect on what will happen next (and each user’s definition of “current” will be different – one user could see “current” as the last month, another user could see it as the last week and yet another could see it as the last 24 hours). Others will be interested in how a stock has performed over time. The choice is yours and will undoubtedly be influenced by the methodology of your personal approach.
When you first log in, the default Test Period is set for the last 30 days. You can change this period at any time.

“Trader” vs. “Investor”:

It is important that each user have a plan about how they will approach the market. Are you more of a Trader or more of an Investor? Traders tend to hold on to stocks or securities for shorter periods of time and play both up and down trends, while Investors tend to hold on to stocks and securities for longer periods of time and are more interested in “investing” in the future of a company.

TradersFreedom is designed to capitalize on both up and down market trends, which lends itself to a Trader’s philosophy. However, Investors can also benefit from TradersFreedom when testing their investment ideas. The most important thing is that each user be clear about his/her own approach.

Your personal tolerance for risk:

Only you will know what your personal tolerance for risk is. TradersFreedom puts you in the driver’s seat – you must decide how you will manage your own risk as part of your trading philosophy.

TradersFreedom provides you with several data points that are helpful:

DD (shown in the “Algorithms” table):

This is the Drawdown or largest pullback in your investment measured in % during this particular trading period. This is calculated by subtracting the lowest value from its peak Net P/L. The lower the DD the less the volatility – ideally you want this number to be low.

# of Trades (shown in the “Algorithms” table):

This is the # of trades in the particular Test Period you’ve chosen. Some traders will prefer to trade algorithms that have a larger “track record” of trades in a given Test Period. This is helpful if you are trying to identify a successful trading trend (which is harder to do with only one or two trades). This is a personal decision and each trader will have their own preference.

Long P/L (shown in the “Algorithms” table):

This is the Net Profit (or Loss) in net $ for the Long trades in the Test Period. This figure gives you an indication of how successful TradersFreedom is when trading a “Long” signal for the selected algorithm. If the selected algorithm is losing money in long trades, you might reconsider trading a “Long” signal.

Short P/L (shown in the “Algorithms” table):

This is the Net Profit (or Loss) in net $ for the Short trades in the Test Period. This figure gives you an indication of how successful TradersFreedom is when trading a “Short” signal for the selected algorithm. If the selected algorithm is losing money in short trades, you might reconsider trading a “Short” signal.

Buy & Hold (shown in the “Summary” table):

This is how much money you would have made (or lost) if you had bought and held the stock during the same Test Period, rather than trading it Long, Short or Out along with the signals. This is a good point of comparison.

We can’t stress enough how important it is for you to have a plan for trading. What you take into account is ultimately up to you.

How often you want to trade:

If you prefer to trade more often, you should consider focusing on the higher numbered algorithms as they tend to be more active. If you prefer to trade less often, you should consider focusing on the lower numbered algorithms as they tend to trade less frequently.

TradersFreedom is designed to take as little of your time as possible, but you do need to check the system daily for your trading signals.

If the signal for your selected algorithm is the same as the position you are currently in, then you have no additional trades to make – you simply maintain your current position. Because there is a fresh signal generated at the end of each trading day, there is a daily possibility that your signal will change.

Timing your entrance in a trade:

Because you will be looking at different stocks at different times, you may find yourself interested in a stock that is in the middle of a trading cycle, meaning it has been generating a “Long” (or “Short”) signal for some period of time. Although it is up to each trader when they choose to execute their trades, entering in the middle of a cycle may affect your Net P/L. Often traders will wait to enter a trade until the signal for their selected algorithm flips.

Other factors affecting the market:

TradersFreedom is an analytics tool that does not take news items, (earnings reports, ratings upgrades/downgrades, Fed policy decisions, etc.) into account when calculating signals. It is up to each trader to decide how these items will influence their trading methodology.

Stick with it:

It is important that once you have an established routine for selecting your stocks and algorithms that is working for you, you should continue to follow your own system. Do your homework and when you feel confident in your process, have the courage of your convictions.